Copper Sinking

Copper prices are turning lower once again as we head into the weekend. The current sell-off comes on the back of the latest set of Chinese economic data overnight. The China manufacturing PMI was seen falling deeper into negative territory last month at 49.1 down from 49.2 prior and expected. With the factory sector clearly still struggling, the near-term demand outlook for copper remains muted.

China Property Woes

Recent efforts by the government to help bolster the ailing property sector have failed to revive demand for now. Indeed, this week China’s largest property developer Country Garden noted that a liquidation petition had been filed against it, despite the government’s efforts to help restore confidence. Given that the property sector is one of the biggest sources of demand for copper, the ongoing troubles are a bad omen for near-term prices.

USD in Focus

Away from issues in China, traders are keeping an eye on developments in the US. An uptick in core PCE reported yesterday has seen USD turning higher into the end of the week. With the Fed stressing that it is in no rush to cut rates, USD looks likely to stay supported near-term, creating headwinds for copper prices. Looking ahead today, traders will be watching the latest US ISM manufacturing print as well as waiting on a slew of Fed speakers later on.

Technical Views

Copper

The market is once again turning lower within the 3.7370 – 3.9410 range which has framed price action over the last three months. With momentum studies flagging, focus is on a continuation lower and a fresh test of the range lows which, if broken, open the way for a test of deeper support at 3.5475 next.